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February 02, 2011

Paying for Water and Wastewater Infrastructure

Watermain Breaks

According to the Watermain Break Clock , on average 700 watermains break per day in Canada and the U.S., and as of today since January 2000, there have been 2,834,755 watermain breaks, costing an estimated $11 billion to repair. According to the EPA there are about 240,000 watermain breaks in the United States each year which according to the USGS waste 1.7 trillion gallons of water. The survey estimates the cost at about $2.6 billion annually.

Leakage

According to Mark Lechevallier of American Water, 42 billion gallons of drinking water are produced and delivered every day in the US, of which 7 billion gallons, or 18% is lost through leakage.

A recent article outlines the practical aspects of what this means for the city of Pittsburgh. Breaks are most frequent after periods of below freezing weather, but they occur year round. In January the Pittsburgh Water and Sewer Authority loged about four to five watermain breaks every day and the rate is increasing. In January 2011 there were 85 breaks, in January 2010, 74 and fewer in January 2009. The PWSA reported to the state Department of Environmental Protection the loss of 17.8 million gallons of water per day in 2009, or 25 percent of the water it delivered.

Wastewater Overflows

Aging infrastructure and outdates sewer systems have brought about the chronic discharge of raw sewage into U.S. surface waters. The EPA estimated in August 2004 that the volume of combined sewer overflows (CSOs) discharged nationwide is 850 billion gallons per year. Sanitary sewer overflows (SSOs) result in the release of as much as 10 billion gallons of raw sewage yearly. The EPA estimates that there are at least 23,000 - 75,000 SSOs per year. According to the New York Times, between 2006 and 2009 more than 9,400 of the US’s 25,000 sewage systems have violated the law by dumping untreated or partly treated human waste, chemicals and other hazardous materials into rivers and lakes and elsewhere, according to data from state environmental agencies and the EPA.

The EPA has been getting serious about CSOs and SSOs. For example, recently the U.S. Justice Department and the EPA have announced a comprehensive Clean Water Act settlement, or consent decree, with the Northeast Ohio Regional Sewer District (NEORSD) to reduce flow of untreated sewage through combined sewers into Cleveland area waterways and Lake Erie. Currently NEORSD discharges about five billion gallons of untreated, raw sewage 3,000 to 4,000 times per year into Lake Erie and nearby rivers. As a result of the settlement NEORSD will be required to capture and treat more than 98 percent of wet weather flows entering the combined sewer system, which services the city of Cleveland and adjoining communities. The settlement will require NEORSD to spend approximately $3 billion to install pollution controls, including the construction of tunnel systems, that will reduce the discharges of untreated, raw sewage to approximately 537 million gallons per year. The consent decree also requires NEORSD to invest at least $42 million in green infrastructure projects. Finally the settlement requires NEORSD to pay a penalty of $1.2 million.

Deferred Maintenance

The problem is, according to Wayne Klotz, past president of the American Society of Civil Engineers (ASCE), that most jurisdictions are spending between 1 and 1.5 percent on infrastructure, which is down from 5 to 6 percent spent in the 1960s and '70s.

To make up for this gap, in 2007, the U.S. Environmental Protection Agency (EPA) estimated that the drinking water infrastructure in the US requires an investment of $334.8 billion over the next two decades.

In September 2002, an EPA Gap Analysis concluded that if there is no increase in investment, there will be a $6-billion gap between current annual capital expenditures for wastewater treatment ($13 billion annually) and projected spending needs. And the longer we wait the the greater the investment required. The EPA CY2004 clean water needs survey estimated an investment of $202.5 billion over 20 years. In the CY2008 needs survey the investment has risen to an estimated $344.8 billion, primarily as the result of age, deferred maintenance, and population growth. (Slide: Kathy Shandling, IPWA)

Financing Investment in Water and Wastewater Infrastructure

Akron is another example of a city faced with an EPA consent decree to reduce sewer overflows. According to NACWA the estimated total cost to the City of Akron of complying with the consent decree will be $500 million by 2028. Akron has no cash capital and must borrow to finance the required sewer improvements. This approach means a 200% increase in the water rate, which will be difficult to get support for. (Slide Nathan Gardner-Andrews, NACWA)

In 2009, the Pittsburgh Water and Sewer Authority began a major investment in infrastructure upgrades. The City imposed a 5 percent distribution service charge on everyone's water bill two years ago to create a fund explicitly for fixing infrastructure. That fund's budget in 2011 is projected to be $6.3 million. In addition, the PWSA doubled its capital improvement budget in 2010 to $41.7 million from $20 million in 2009.

I attended a UIM water and wastewater conference in Cleveland recently, and several speakers emphasized that governments don’t have the kind of money that is required and cannot be expected to shoulder the entire financial burden. Also in North America, there is a culture that water should be “free”, and there is a resistance to paying more for water. My takeaway from the conference is that the biggest issue facing the water and wastewater industry is how are we going to pay for renewing our water and wastewater infrastructure.

The good news is that there are many vehicles for funding infrastructure improvments. As Kathy Shandling of the International Private Water Association phrased it, there is no single solution for addressing the financial hurdle, there needs to be a menu of options and she listed a few.

grant financing

public/municipal financing

commercial bank financing

user/consumption fees-tariffs

state revolving fund programs

private activity bond programs

public-private partnerships (PPPs) of which there are a variety

city and private equity sharing

public trust

PACE bond program

private equity infrastructure funds

national infrastructure banks, for example as proposed by the Obama Administration

an infrastructure stimulus package

Investing in Technology

One of the things that NACWA is encouraging local governments to do is to invest in new technology and to pioneer innovation to maximize the benefit from their limited funds in addressing water quality.

At the UIM conference we had the opportunity to visit one of Cleveland's wastewater treatment plants. The Southerly Wastewater Treatment Plant serves a population of more than 601,000 in the Greater Cleveland area. This facility is the largest of the District's three wastewater treatment plants and one of the largest plants of its kind in the country. Southerly has an average daily flow of 125 million gallons per day (mgd). It can provide complete treatment to a maximum of 400 mgd, and an additional 335 mgd of storm water can receive primary treatment only.

Built in 1927, Southerly is one of the largest activated sludge plants in the country. The process is to separate the solids from the liquids and using a sequence of tretements to reduce the amount to water in the solids to the point where it can be incinerated. The fluid effluent is processed and then flows into the river. The ash from the incineration process goes into ash lagoons. The plant's electricity requirements are about 7.8 million kwh per month which costs $492,000/month. The natural gas requirements for the incinerators is 37,000 million cubic feet (mcf) per month, which costs them $417,000/month.

Most of the Cleveland area's sewers are combined sewers, so everything that comes into Southerly gets primary treatment, but not all gets secondary treatement. About five times a year, the inflow is so large that some of the wastewater bypasses secondary treatment.

Cleveland is not a growth area. In fact their population is declining, so they have a declining tax base. But even with their very limited funding they are investing in new technology. I saw gravity belt thickeners that they are piloting. And they told us that they are in the process of building new fluidized bed processing capability. They are looking at waste heat recovery. They foresee the EPA will be increasingly serious about heavy metals and they are investigating technology for removing heavy metals.

(Thanks to Terry Bennett and Melanie Ensign for pointing me to the Pittsburgh and NEORSD Consent Decree articles.)